As we repeat goal-directed behaviors, these behaviors often become habitual and so routine that we can perform them almost without thinking. This capacity to form habits is very valuable in our normal lives. When we can operate in a habitual mode, we free up cognitive resources. The process by which goal-directed behaviors become habitual has attracted great interest among basic scientists and also among physicians, because when this habit-process goes awry, behavioral problems can emerge. In neuropsychiatric disorders in which repetitive behaviors are predominant symptoms, habit forming may be in overdrive. When we lose the ready facility to form habits, thoughts and actions may lose part of the fundamental organization that normal routines confer on our behavior. The goal of the proposed work is to identify the circuit-level neural mechanisms that underlie this transition from deliberative behavioral performance to a habitual mode of performance in which the behavior continues to be performed without reference to the original goal. It is known that parts of prefrontal cortex and the striatum are necessary for habit formation, but how they act to allow the behavioral shift to habitual behavior still are not understood. We have recorded neural activity in the prefrontal cortex and striatum simultaneously through the entire process of habit formation from early acquisition to the over-training period when the habit becomes ingrained. We have found that as the shift from goal-directed to habitual behavior occurs, there are remarkable changes in the firing patterns of neurons both in different parts of the striatum and in the prefrontal cortex. We now propose experiments to determine how these regions interact and whether there are 'controller' regions by perturbing or silencing individual zones as rats form habits, in order to understand how this network of brain regions bring about shifts between flexible goal-directed behavior and less flexible habitual behavior. Disturbances in the balance between flexibility and fixity of behavior are critical in a number of neurologic and neuropsychiatric disorders ranging from Parkinson's disease to obsessive-compulsive disorder to psychosis. Thus, the experiments proposed are directly related to the mission of the NIMH to understand, prevent and cure mental illness.